United States: MA Supreme Court Reinforces Employer Obligations On Sexual Harassment

Last Updated: September 21 2016
Article by David G. Bowman, Lisa Stephanian Burton, Siobhan E. Mee and Douglas Schwarz

The court's decision to restore a $500,000 punitive damages award for failure to adequately address a sexual harassment complaint highlights employers' duty to investigate every allegation and take appropriate remedial action.

A recent Massachusetts Supreme Judicial Court (SJC) ruling highlights the potential for significant punitive damages exposure when an employer is on notice of a sexually hostile environment and fails to take adequate remedial steps to address the situation. This LawFlash describes the ruling and then identifies six key takeaways.

After finding that the plaintiff suffered sexual harassment by her direct supervisor, a jury found car dealer Lexus of Watertown liable for $40,000 in compensatory damages for emotional distress.1 The jury then went on to award $500,000 in punitive damages to punish the employer for what the jury found to be intentional actions or reckless disregard for the employee's rights under the state's discrimination laws. The trial court set aside the award of punitive damages but let stand the award of compensatory damages. Both sides appealed, and the highest court in the commonwealth reinstated the punitive damages award.

In its decision, the SJC established a two-part test to determine whether a plaintiff is entitled to punitive damages from his or her employer based on a sexually hostile or offensive work environment that another employee creates. First, was the employer on notice of the harassment and failed to take adequate measures to investigate and remedy the situation? And second, was that failure "outrageous or egregious" based on the five nonexclusive factors outlined in Haddad v. Wal-Mart Stores, Inc., 455 Mass. 91, 110 (2009)? The five Haddad factors are

  1. whether there was a conscious or purposeful effort to demean or diminish the class of which the plaintiff is a part (or the plaintiff because he or she is a member of the class);
  2. whether the defendant was aware that the discriminatory conduct would likely cause serious harm or recklessly disregarded the likelihood that serious harm would arise;
  3. the actual harm to the plaintiff;
  4. the defendant's conduct after learning that the initial conduct would likely cause harm; and
  5. the wrongful conduct's duration and if the defendant tried to conceal it.

Applying this test to the record, the SJC concluded that the jury was warranted in finding that, independent of the underlying harassment, the employer acted intentionally or with reckless disregard for the employee's rights under G. L. c. 151B when it failed to take adequate remedial action after the employee notified it of the harassing behavior, and that a punitive damage judgment was appropriate.

With this decision, the SJC reinforces employers' obligation promptly and "adequately" to investigate each and every sexual harassment allegation. The decision also highlights an employer's duty to take appropriate and proportional remedial action to end the harassment and address the situation with alleged harasser employees. Key takeaways from this decision include the following.

Punitive damages exposure is present as soon as an employer knew or should have known about sexually harassing conduct in the workplace. Employers should establish and enforce a clear process for reporting all complaints of sexual harassment or a hostile environment. The reporting procedure should impress on all levels of the organization the importance of reporting complaints of harassment and communicating those complaints to the appropriate level of management.

Where the channel for sexual harassment notifications (as delineated in an employer's sexual harassment policy) fails to appropriately report or investigate a sexual harassment complaint, that lack of response is per se evidence of a failure to adequately remedy the alleged discrimination. Employers should establish a clear and thorough investigation and remediation procedure to ensure that they conduct investigations in a prompt, thorough, and objective manner. This requires having access to investigators who are trained to conduct such investigations and are not biased. Some employers will retain independent investigators from outside their company when they lack the internal expertise or resources to conduct an investigation, or when particular allegations are so unique, or concern such high ranking employees, that they require external expertise and independence.

An employer's failure adequately to investigate a complaint may result in a substantial punitive damage judgment against it. The risk of punitive damages underscores the importance of training discussed below.

An employer's investigation must be unbiased and adequate to a third-party reviewing the situation. Supervisors should take seriously and report all allegations of potential harassment, no matter how "offhand" or informal. Best practices dictate that investigators should interview all relevant personnel, take interview notes or prepare an investigation summary that reflects the questions they asked their interview subjects, and give the complainant an opportunity to participate in the investigation.

Employers must take prompt and effective remedial action if a complaint proves to be well-founded. This includes disciplinary action up to and including termination of employment for harassment.

All managers and supervisors should receive training on their responsibilities to prevent and address all forms of unlawful harassment. Managers must know that when they are on notice, they are required to promptly report incidents to an investigating authority (e.g., human resources, compliance, legal, etc.). Managers should consider themselves to be on notice when they either observe the questionable behavior or they learn about it from another source, including, for example, the complainant. Most importantly, managers should not try to validate a complaint's legitimacy but report it to the investigating entity to make that conclusion.

Footnotes

1 Emma Gyulakian v. Lexus of Watertown, Inc., et. al., 475 Mass. 290 (2016).

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Fisher Phillips LLP
McLane Middleton, Professional Association
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Fisher Phillips LLP
McLane Middleton, Professional Association
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions